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Fed Study Confirms e-Prescription Savings Potential

A new federal study underscores the potential of electronic prescription systems to slash prescription drug costs.

So-called “e-prescribing” systems that allow doctors to select lower-cost or generic medications can save $845,000 per 100,000 patients per year and possibly more systemwide, according to findings from a new study funded by the Department of Health and Human Services’ (HHS) Agency for Healthcare Research and Quality (AHRQ).

The findings might have important financial implications, the study’s authors concluded. As e-prescribing systems become more widely available and easier to use, their greater use among doctors is likely. Complete use of e-prescribing systems with formulary decision support could reduce prescription drug spending by up to $3.9 million per 100,000 patients per year, according to the study’s authors.

The findings come at a time when many employers, policy-makers and patients are seeking ways to control fast-rising drug costs. Already, many employer health plans rely on lists of approved prescription drugs known as formularies. Under these arrangements, patients are often charged the lowest co-payment for generic medications, a higher sum for preferred brand-name drugs, and the highest amount for non-preferred brand-name drugs.

A major challenge to doctors’ widespread use of tiered systems is the lack of current data on insurers’ prescription drug formularies at the time of prescribing. Providing doctors with current lists of approved medications is challenging because the information changes frequently.

To test the cost-savings potential of an e-prescribing system that includes data on insurers’ formularies, researchers at Brigham and Women’s Hospital and Massachusetts General Hospital in Boston compared the change in prescriptions written in three formulary tiers before and after an e-prescribing system was launched. The study examined data collected over 18 months from two major Massachusetts health insurers covering 1.5 million patients.

Doctors using e-prescribing with formulary decision support, which accounted for more than 200,000 filled prescriptions in the study, increased their use of generic prescriptions by 3.3 percent, the study’s authors found. These changes were above and beyond increasing use of generics that was occurring among all doctors and the already high rate of generic drug use in Massachusetts.

Based on average costs for private insurers, the study’s authors estimated that the use of e-prescribing could save $845,000 per 100,000 patients per year and generate even higher savings with greater use. The study, titled “Effect of Electronic Prescribing with Formulary Decision Support on Medication Use and Cost,” is published in the Dec. 8, 2008, issue of the Archives of Internal Medicine.

“These findings show that decision support can improve value for patients,” said AHRQ Director Carolyn M. Clancy, M.D. “These systems have the added and important benefit of improved patient safety by flagging medication errors before they occur.”